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Criteo Expands Its Scope After Another Beat and Raise

The market is rightly celebrating another strong quarter from the ad retargeting company. Here's what investors need to know.

Shares of Criteo SA (ADR) (NASDAQ:CRTO)jumped more than 10% Wednesday after the advertising retargeting specialist released strong third-quarter 2015 results. Now that the dust has settled, let's have a closer look at what drove Criteo's business as it entered the second half of the year.

Agreed to acquire HookLogic, which specializes in connecting e-commerce retailers with consumer brand manufacturers, expanding Criteo's business to brand manufacturers and offering supplemental strength of its performance marketing platform. The acquisition should close "in the coming weeks."

What management had to say

Criteo CEO Eric Eichmann elaborated, "We continue to deliver terrific results for advertisers. And with the addition of HookLogic and Criteo Predictive Search, we will cover an ever-increasing part of their performance marketing and become a more strategic partner."

CFO Benoit Foulland stated, "We continue to deliver rapid growth and expanding profitability. Our ability to drive operating leverage while investing in the business demonstrates the scalability of our model."

Looking forward

For the fourth quarter, Criteo expects revenue ex-TAC between $207 million and $210 million, and adjusted EBITDA between $72 million and $75 million.

As such, Criteo increased its guidance for the full-year 2016, and now expects revenue ex-TAC growth between 33% and 34% (up from between 30% and 34% previously) at constant currency, with adjusted EBITDA margin as a percentage of revenue increasing year over year between 120 basis points and 140 basis points. Both Criteo's current-quarter and full-year outlooks exclude contributions HookLogic.

All things considered, there was nothing not to like about this solid quarterly performance. Criteo handily exceeded its own expectations during the quarter, is adding new clients at an accelerating clip, and strategically expanding the scope of its business through both acquisitions and promising new in-house products. As a result, it's hard to blame the market for so aggressively bidding up Criteo stock yesterday.

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Steve Symington has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Alphabet (A and C shares) and Facebook. The Motley Fool recommends Criteo. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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